How to disable the File Encryption (EFS) feature in Windows. These steps should work in Windows 2000, XP and Vista.
1. Hold down the Windows key and press R.
2. Type regedit and click OK.
3. Click the plus sign next to HKEY_LOCAL_MACHINE
then SYSTEM

then CurrentControlSet
then Control
then click FileSystem.
4. Look for an entry on the right side for NtfsDisableEncryption. If it doesn’t exist, you will need to create it. To do so, right-click on FileSystem and selectNew > DWORD Value. Give the value a name of NtfsDisableEncryption. Press the Enter key when you are done.
5. Right-click the NtfsDisableEncryption entry and click Modify.
6. To disable EFS set the Value data to 1. (To enable EFS again, set the Value data to 0 or delete NftsDisableEncrpytion)
7. Restart the computer to apply changes.
Now when trying to encrypt a folder, the following error will be produced:

An error occurred applying attributes to the file:
{file path and filename}
Access is denied.
Windows Vista Command
In Windows Vista, you can accomplish the same thing by simply using the following command on the Run line:
fsutil behavior set disableencryption 1